BESTONE INDUSTRIES PRIVATE LIMITED,NEW DELHI vs. ITO, NEW DELHI

ITA 4758/DEL/2026Status: DisposedITAT Delhi28 September 2026AY 2022-237 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held in favour of the assessee on all grounds. Regarding employees' benefits expenses, the Tribunal found that the AO and CIT(A) did not consider the details and documents filed by the assessee, which showed that the total salary of the employees did not attract TDS. Therefore, the disallowance was unsustainable. For the interest on unsecured loans, the Tribunal noted that the disallowance by both lower authorities was made on an estimated basis without proper reasoning. The Tribunal stated that if the payment was not justified, the entire interest should have been disallowed, not a portion on an ad-hoc basis. Similarly, concerning outstanding creditors, the Tribunal found that the 25% disallowance was made on an ad-hoc/estimated basis without any material on record to prove that the creditors were not genuine. The Ld. DR could not rebut these contentions. Accordingly, the disallowance of creditors was also deemed unjustified. The appeal was allowed on all issues.

What were the facts?

The assessee, Bestone Industries Private Limited, filed an appeal against the order dated 13.02.2026 passed by the CIT(A)-24, Delhi, for Assessment Year 2022-23. The appeal challenges additions made by the Assessing Officer (AO) and confirmed by the CIT(A). The disputed amounts relate to disallowance of employees' benefits expenses (Rs. 88,34,678), disallowance of a portion of interest paid on unsecured loans from a director (Rs. 41,50,312), and disallowance of 25% of outstanding creditors (Rs. 17,52,029). The assessee contended that the AO and CIT(A) failed to consider submissions and documents provided during the proceedings.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the AO erred in disallowing employees' benefits expenses of Rs. 88,34,678 for non-deduction of tax at source, contrary to the assessee's submission that the employees' total income was not liable for TDS, and a detailed chart was provided (under Section 40(a)(ia))? 2. Whether the AO and CIT(A) erred in disallowing 6% interest (Rs. 41,50,312) on unsecured loans obtained from a director, restricting it to 12% instead of the contracted 18%, without appreciating commercial expediency (under Section 36(1)(iii) and Section 37(1))? 3. Whether the AO and CIT(A) erred in disallowing 25% of outstanding creditors (Rs. 17,52,029) despite the assessee furnishing all required information in the format provided under Section 142(1)? Assessee's Contentions: - Employees' benefits expenses were correctly treated as no TDS was applicable as per salary details submitted. - Interest on unsecured loans was paid due to financial exigency, and disallowance on an estimated basis was unjustified. - All required information regarding creditors was furnished as per the AO's notice. Revenue's Contentions: - The Ld. DR relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 36(1)(iii),Section 37(1),Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘H’ NEW DELHI

Before: MS. MADHUMITA ROY & SH. KRINWANT SAHAY

For Appellant: CA Sh. Vipin Sharma, CA
Hearing: 23.07.2026Pronounced: 28.09.2026

PER KRINWANT SAHAY AM Appeal in this case has been filed by the assessee against the order dated 13.02.2026 passed by the CIT(A)-24 Delhi for the A.Y. 2022-23. Grounds of appeal are as under :-

1.

That the order of Ld. AO and CIT (A) is bad in Law and against facts of the case.

2.

That the Ld. A.O. erred in making addition of Rs. 1,47,37,019/- without considering the submission of the assessee. (1) Employees Benefits Expenses disallowed equal to Rs. 88,34,678/- for the reason tax not deducted at source despite the fact submitted during the course of proceeding that none of the employee's salary was liable for TDS and a detail chart of employees wise salary submitted. (2) On the facts and

The order continues below.

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